thoughts

,
industries.

January 2013

Smart Home:
Hope
or hype?
January 2013

Nicolas Clinckx
Partner

nicolas.clinckx@greenwich-consulting.com
+33 (0) 6 64 73 56 41

Yann Baffalio
Senior Manager

yann.baffalio@greenwich-consulting.com

Axel Duplan
Manager

axel.duplan@greenwich-consulting.com

Executive Summary
The Smart Home market is based on “home automation” and covers four distinct areas:

1. Security: alarms, presence simulation, remote information and intervention

2. Health: support for the elderly, home care

3. Energy efficiency: automatic control and regulation of all utilities (water, electricity, gas)

4. Comfort: ambiance, lights, interconnection of existing devices

For this report, we are mainly interested in energy efficiency services and comfort solutions.
Long proclaimed as the future housing revolution in the 90s, it is clear that home automation failed
to capture the imagination of the general public; it was hampered by technological complexity,
the prohibitive cost of devices dedicated primarily to comfort use, and low perceived added value
for customers.
The rise of environmental issues, encouraged by the environmental awareness movement and
the sustained increase in fossil energy prices, has led to a revival of the “Smart Home” concept.

Benjamin Ferrand
Senior Consultant

benjamin.ferrand@greenwich-consulting.com

Although today the penetration of Smart Home commercial offers remains confidential, several
factors are positively influencing the adoption of these solutions:

•T 
he maturity of access technologies and the simplification of interfaces; even if the
technological silos between different home environments still differ widely, the development
of technologies and standardized protocols inherited from the telecom and computing
worlds is reducing this complexity. In addition, the proliferation of tablets and smartphones
at homes creates new multi-screen uses, allowing the simplification of client interfaces and
lowering equipment costs (not strictly dedicated to home automation usage but integrated
with existing devices)

•T 
he need to reduce home energy consumption: the low return on investment of current
energy efficiency solutions (between 12 and 20% reduction on the total bill depending on
the quality of the consumption measurement) has not encouraged provision until recently.
The likely increase in energy prices and the impact of the economic crisis, however, should
improve the perceived value of these solutions and the quick return on investment for
customers in the medium term

•R 
egulatory initiatives encouraging the development of the Smart Home market: the
European commission has set a 80% target of European homes to be equipped with smart
meters by 2020

• The proliferation of initiatives and partnerships around the Smart Home, involving major
players in the utilities, telecommunications and IT integrators
Thoughts, Smart Home: Hope or Hype ?

1

Our special thanks to the
following companies which
greatly contributed to the
development of this White
Paper by providing valuable
insights and testimonials:

• Alstom Grid
• Direct Energie
• General Electric
• Lyonnaise des Eaux
• Somfy
• Webhelp

Although today, an interest from the B2C sector can be seen as beneficial to B2B, the widespread
adoption of such technologies remains uncertain and conditioned by the removal of various obstacles:

• A lack of standardization of data transmission, collection and storage technologies
preventing the emergence of a reliable and consistent ecosystem

• An ecosystem of unstructured players often operating in silo

• Strong consumer inertia regarding the increase in energy costs and a lack of visibility
of Smart Home solutions: for example, Americans would be willing to undergo an
increase in their bills of $128 per month before considering the option of energy efficiency
improvement in their homes (Energy Pulse 2011)

•
Consumer distrust regarding issues of collecting and processing private energy
consumption data, which hampers, especially in France, the deployment of smart meters
such as ‘Linky’

Despite the obstacles outlined, Smart Home players have to meet two major challenges in order
to stimulate the market and develop attractive offers:

1. Adjust the value proposition based on the expectations and the maturity of customers
across user lifetimes

2. Build a viable business model and clarify the procedures of value repartition between
stakeholders

Five models exist among Smart Home players today: stand-alone equipment, stand-alone
service, Fremium service, equipment subsidized by the B2C service or by a third B2B player. The
trend is to develop the equipment subsidy model by the service.
Due to their control of the triptych device / software / service, and their central presence in the
home via internet box and mobile phones, we believe that telecom operators hold key assets to
structure the Smart Home ecosystem around their connectivity platforms. They are also equipped
to address the key issues of the value proposition and manage Smart Home customers at a lower
cost. However, their difficulties in integrating and leading the whole value chain by themselves
force them to develop the ecosystem by implementing logical partnerships: large operators like
AT&T or Deutsche Telekom for example have created standardized platforms open to partners
from other sectors (electricians, manufacturers, pure players).
Based on our experience in working with complex ecosystems which involves a multiplicity of
stakeholders like NFC, we recommend a three stage approach to implement a Smart home strategy

Build an aspirational
segmentation

Investigate
innovative services

Map the ecosystem
and assess the models

• Identification of current and
future customers’ needs

• Portfolio of initiatives
• Features of current solutions

• Previous experiences on similar
issues such as NFC

• F irst customer segmentation
on the basis of macro service
criteria to be tested

• Positioning vs. competition / new
entrants

• Identification of business and
industrial partners

• Identification of best practices

• Design of the value proposition

•Q 
ualitative and quantitative
studies

• Assessment of possible business
models

• Association of customer profiles
with potential services

Successful strategy execution must be guided by a prioritising approach of the client’s value
proposition:
• The demand is currently greater from B2B customers compared to residential customers, especially
for energy-intensive industry types of businesses (data centers, process or manufacturing
industry...) that are constantly looking for levers to optimize their costs positions
• Corollary of the target retained, the services presenting the best return on investment are those
that will be adopted most widely
• A minimal partnership with a “Utilities” player seems necessary, since telecom operators will not
be able to propose by themselvers all the key services for companies
Thoughts, Smart Home: Hope or Hype ?

2

both for content (Internet. however. combined with a lower cost of computer components (CPUs. 1. this concern for reducing energy expenditure should be of relevance to all households regardless of their social and economic levels.I. 1 . The wide availability of connected devices. connectivity) and mechanical components (sensors. overcoming their traditional reluctance. This overall simplification of Smart Home technologies allows an easier sale of these services to the general public.g. should allow faster development of home automation: instead of developing dedicated controllers. people are now increasingly aware of the issues of sustainable development and the need to reduce energy consumption for the greater good. VoIP . Four environmental trends. actuators). Maturity of technologies and simplification of interfaces The IP protocol has become the standard for communications industry. In addition. 2. As a result.Commission de Régulation de l’Energie. A suitable environment for the emergence of Smart Home Long proclaimed as an important development in home technology. Germany is particularly sensitive to these issues since its choice to exit nuclear power. wind. The data associated with this digital customer experience became accessible in mobility thanks to the latest generation of mobile networks (3G / 4G).. The number of connected devices in the home has increased dramatically: an average of 25 in 2010 as compared to only one in the 1970s. the development of “all-electronic” devices (e. Moreover. replacement of mechanical gas meters and water meters with electronic ones) allows the grafting of a connectivity layer on existing services at lower cost. companies can rely on the ecosystems of existing tablets and smartphones.. If households suffering from fuel poverty (19% of French households in 2012) are not the core target of very expensive Smart Home solutions. an ubiquitous access through mobile devices and a “plug & play” experience related to smart meters. IPTV. solar) drives them to develop smart grid and consumption management technologies. home automation has so far failed to convince the general public. Energy regulator in France Thoughts. 75% in 2011 and 70% in 2010) and almost all (97%) of the respondents expect to see energy prices rise in the coming months. smartphone and tablet applications and the emergence of cloud computing. Smart Home: Hope or Hype ? 3 . show that Smart Home is ready for takeoff. an easier interaction via touchscreen terminals. Need to reduce energy consumption in homes The need for governments to review their energy mix to reduce dependence on fossil energies and nuclear technology in favor of alternative energy sources (hydro. The annual “Energy-Info“ survey published by the CRE1 shows that 80% of the French public consider energy as an issue of major concern (vs. the inevitable increase in energy prices combined with current economic difficulties should significantly improve the perceived RoI from Smart Home solutions for consumers.) and for M2M (machine-to-machine).

Laurent Schmitt. “Tahoma” by Somfy or even “Blyssbox” by Castorama • “Plug & Play” equipments by Withings or Ijenko New Energy Systems having integrated large amounts of intermittent renewables. eQ-3 and Samsung • Joint-venture between Swisscom and Asoka to provide Home Energy Management services • British Telecom and British Gas initiatives in Smart metering • Deployment of “Linky” Smart Meters by EDF • Ijenko. Regulatory initiatives Construction standards include maximum limits for energy consumption – several recent standards and labels (BBC standard. Smart Home: Hope or Hype ? 4 . standardization continues to mature through strategic initiatives such as the ETSI-CENCENELEC.Smartgrids Solutions Alstom Thoughts. The new resulting eco-system will integrate utilities. They will altogether design end to end integrated architectures with lowest cost of ownership. smart eco citizens who have chosen renewables and EV in their eco cities. the Smart Home return on investment will be shortened by new revenues streams coming from early adopters. The use of active technologies instead becomes necessary to control and optimise the use of resources for housing. in order to balance renewables through intraday.3. which may help boost the market in the coming years: • Launch of the “Digital Life“ platform by AT&T • Launch of the Qivicon alliance by Deutsche Telekom. Proliferation of initiatives and partnerships around Smart Home Although the market remains above all driven by a number of small startups. governments are under pressure to legislate the housing industry to meet their Kyoto Protocol commitments. including EnBW. Grid operators are facing the need to connect with every consumer – B2B or B2C – owning potential flexibility resources. We can mention the following initiatives. Likewise. In this context. In parallel. the Climate and Energy Package. EU regulation requires the deployment of smart meters: the target of 80% of European households equipped by 2020 was recently confirmed by the European Commission which estimates the necessary investments to be around 140 billion euros. RT2012 in France) have set strict consumption targets (50kWh / m² / year). and the birth of larger partnerships. To fulfill these commitments. sets a target of 20% improvement in energy efficiency (compared to 1990) and 20% share of renewable energies in energy mix. Vice President . Direct Energie and Ademe for the Modelec initiative • Lines of home control equipment: “In One“ by Legrand. These goals cannot be achieved passively (using building materials/ optimised architectures). “Tebis” by Hager. Miele. there is a recent trend of participation from bigger players from telecoms or utilities. The RT2020 is geared towards the development of constructions with positive energy. governments are setting up public aids encouraging owners to equip themselves. critical energy management vendors such as Alstom and Telecom operators. 4. The European declination. “IHC” by Schneider.

remote security and monitoring. Smart Home: Hope or Hype ? 5 . only the removal of these barriers will actually allow the market to take off. represent the main gateway for the client’s home connectivity services via traditional technologies (WiFi. This silo logic prevents to build an attractive solution for the end user and reduces the perceived value of the Smart Home product.II. . VoD.and the in-silo nature of the players operating in the ecosystem. This fragmentation in technological standards contributes to the opacity of Smart Home offers from the consumer’s viewpoint. each of these technologies is available in several versions. Players in the world Multimedia are in competition with telecom operators for the provision of some services (TV.. Widi for multimedia. These four silos form a proprietary technological ecosystem Each of these worlds develops its own technological solutions: e. Moreover. Bluetooth) •T  he world of Multimedia Its main characteristics are related to entertainment usage performed by the customer. music. Telehealth 2.g.) •T  he world of Utilities (multi-fluids) This world covers the management of water. OPEN ADR for tertiary and industrial sectors. often incompatible: it is possible that two devices compatible with the Zigbee protocol might not fit together if the implemented standard is not exactly the same. home equipment devices communicate with each other through different technological means because of the disparity in connectivity needs. electricity and HVAC •T  he world of safety. 1. Thoughts. waste.. openings. gas.which is split into several competing standards . comfort and health This world concerns the users of proprietary standards for communication between sensors and the security / health centers (which themselves are connected to a network owner). Zigbee or HomePlug for comfort and security. two major problems are hampering its widespread deployment: a lack of structure in the technological ecosystem . The customer’s place of residence is structured around four separate worlds If “All IP” has become the norm. General public solutions are being developed on the basis of a merger with the world of Utilities: management of brightness. A market in silo characterized by many technological obstacles and insufficient cooperation Since the emergence of the Smart Home concept. through their internet box. This disparity helps to maintain a home network structured around several fragmented worlds: •T  he world of IP access Telecom operators.

ecosystems are already built. Director of Business Unit . The key success factor in providing a consistent Smart Home offer lies in a partnership strategy: • Providing a complete offer allowing the mutualization of costs • Removing the interoperability constraint related to the in-silo nature of the various markets • Establishing a partnership to build on existing initiatives of each partner Smart Home should not be limited to a simple technological rupture.) which often have advanced connectivity features For the moment. Alexandre Fretti.0 • 6LOWPAN Examples of players Horizontal integration through partnership Primary bill 3. Security & Health Progressive influence of IP technologies Primary technologies • Wifi • DLNA • Radio waves • Zigbee IP • Bluetooth • Widi • Wifi • Zwave • Ethernet • Airplay • Homeplug • Femtocell • Miracast • Bluetooth Low Energy • Dash7 • OPEN ADR EnoCean • SEP 2..Webhelp Paris Thoughts. the logic of industrial partnership is limited and unclear for the consumer. Smart Home: Hope or Hype ? 6 . They must be coordinated in order to provide a unified user experience. The concepts of “single point of contact” and “end to end management” will be strong differentiators allowing a significant improvement in the customer experience. Figure 1 – The four silos of the home universe Smart home environment IP access Multimedia Utilities (multi-fluids) Confort. A partnership strategy should be formalised between the home management players In each one of these silos.3 types of companies in these silos will compete to get hold of the customer relationship by positioning themselves as the main intermediary for Smart Home: • Utilities companies access consumers through their smart meters and consumption sensors • Telecom operators distribute their own box and connectivity services • Players in the world of Multimedia develop dedicated devices (Xbox 360. Apple TV ..

using a mobile apps model. Smart Home players have to meet two challenges: 1.In order to structure these various markets and several communication technologies. Smart Grid Solution Sales Director . Smart Home: Hope or Hype ? 7 . it is necessary to aggregate it around open international protocols. Which business model and which methods of value distribution have to be adopted between players? In order to trigger the Smart Home mass market. Rodolphe de Beaufort. How to address customer needs across all the steps of the journey? Figure 2 – A Smart Home solution should take into account the needs throughout the customer journey Customer needs Verbatims Install and train Use Protect Replace Sustainability and interoperability Simplicity Reliability Management of obsolescence Will it work with the devices / systems that I already own? It’s too complicated for me! What do I do if it breaks down? What does this give me in addition to my equipment? This solution is not reliable How can I access data / information related to this equipment? Is it possible to have a remote guidance? I already bought something of this kind and I never used it Who will come to help me if it is not possible to fix it remotly? I want to buy a new equipment. enhance the widespread flexibilities on capacity markets and lower equipment installation costs. but technology changes very often What do I / can I do with my old equipment? How do Home Management solutions manage equipments throughout their lifecycle? 2.GE Energy | Europe & North Africa Thoughts. while favoring “plug & play” and scalable solutions.

isolation. according to a study conducted by OVUM in May 2011.III. A yet undeveloped market with limited consumer demand The inevitable increase in energy prices in the medium term should boost the Smart Home market. Germany (29%). Figure 3 –Interest from eligible households (with a compatible meter) for a “Smart Energy” offer 31% 30% 29% 28% 26% 17% 13% Spain Australia Germany UK USA France Japan Source: OVUM survey (May 2011) On the other hand. we observe that consumers do not yet fully perceive the value of these services: in the case of a subscription type formula. only 17% of homes eligible to Smart Energy offers (with an electronic meter). the United Kingdom (28%) and the USA (26%) today seem more interested in this type of offer but consumer interest remains limited overall.307 in 2020. Smart Home: Hope or Hype ? 8 . there is a strong consumer inertia vis-à-vis the increase in their electricity bill: Americans are willing to undergo an increase in their energy bill by $128 per month before considering investing to enhance energy efficiency in their homes (either passively – catering. In France. The Regulatory Commission of Energy (CRE) estimated in 2012 that the annual bill for a typical French household will increase from €874 in 2011 to €1. However. costs are immediate (installation cost + monthly fee). or actively – via Smart Home type of solutions). showed an interest in this kind of service. while the resulting savings on energy bills are both uncertain and spread over time. at least in measuring and controlling energy consumption. Thoughts.

7% 1.0% 2013 0.3% 5.4% Smart Home Penetration 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: Greenwich Institute (November 2012) If the business development of Smart Home services seems limited in the short term.0% 28.8% 3.3% for Smart Home offers by 2020. Smart Home: Hope or Hype ? 9 . a french penetration rate of 20. Thoughts.8% 0.3% 14. Figure 4 –Smart Home offers (% penetration of households) – France 37.1% 20.0% 9. the global market (including Smart Metering and sensors markets) would still represent $44 billion worldwide in 2016 (ABI / Berg Insight.Greenwich Institute estimates based on demand and the Smart Home services price elasticity. May 2012).

Smart Home adoption offers four incentives for operators. Figure 5 –Value generation is player-specific and the overall business model should incorporate these specifications Equipment manufacturers Operators Telecom Utilities Facility management Metering / Actuators Sales   -  ARPU        -  -  -     Churn OPEX Capex  services providers Electronics Construction device -      No opportunity - Consulting / IT Assistance / Insurance Customer / Security Relationship -  -   -   -  -         Some opportunities  Strong opportunities Thoughts. Increase sales: • Increase direct sales on service delivery.IV. Reduce operating costs by improving the planning of energy production. and smooth the load 4. better manage daily operation and maintenance. Smart Home: Hope or Hype ? 10 . a business model needs to be found As part of a bundled offer. and use of the networks in order to optimise their sizing. energy production) This value generation will be specific to each player and to the business model they will adopt in the partnership. In order to maximize value creation for all players.  Optimise CAPEX by reducing investments in capabilities of production/ storage/ reprocessing and even by translating them into OPEX (e. and indirect sales on related services (including insurance) • Increase or maintain direct customer ARPU by reinforcing the commitment and the content of the offers • Increase or maintain indirect ARPU by customer knowledge data mining 3. Increase customer lifetime by increasing barriers to terminate or to churn 2.g. irrespective of their home market: 1. equipment and consumables.

The electricity provider is responsible for load vs capacity balance and has to be a key player in load shedding programmes. Strategic Marketing and Communication Director – Direct Energie Thoughts. • OPEX reduction lever Telecom and utilities operators can implement a thorough production planning. better manage their network and smooth their load cycles. For exemple. Direct Energie and Ademe are partnering in the Modelec initiative to test new load cycles optimization technologies. Ijenko. • CAPEX reduction lever For a utilities operator.Numerous economic levers can be used by Smart Home players: • Sales increase lever Smart Home will allow consumer electronics vendors to increase sales for four reasons: • Tracking the end of the product life by retrieving information about lifecycle and maintenance (targeting the customer during critical life moments) • Limiting the commoditization of products • Accelerating product renewal • Increasing sales of service delivery and consulting for installation and use • ARPU increase lever All players may consider Smart Home as a lever to maintain or increase ARPU: • Sales of additional services • Development of customer support and installation services • Development of the B2B segment via partnerships • Churn reduction lever On the same way that convergent packages (fixed + internet + mobile) launched by telecom operators have extended customer lifetime (~2x as compared to traditional internet offers). The principle lies in shutting down non vital consumption of subscribers alternately and for a really short period of time. Smart Home is an opportunity to reduce CAPEX through two primary levers: • Optimised management of fluids • Overall equipment efficiency dedicated to production sites and network The energy provider aims at optimizing electrical consumption with two main objectives: reduce the client bill and support the community in smoothing consumption peak. Smart Home: Hope or Hype ? 11 . Martin Bertran. Identifying a ‘Nega-Watt’ business model (while avoiding starting additional power plants during peaks) with proper financial compensation for load shedding is at stake to boost the Smart Home ecosystem. the addition of a new service pillar based on Smart Home may bring value to the telecom operator by reducing customer churn.

g.g.g.Five business models exist today among Smart Home players. Fox alarms) C3 Without equipment (e. Somfy home automation) C2 With equipment subsidy (e. The Energy Detective sensor …) B Stand-alone service (e. can be identified on the Smart Home market Service Free Paid a C1 Free E Not included Equipment Paid Not included D C2 B C3 Figure 7 –The trend is to spread the model of service-subsidized equipment to all Smart Home worlds A: Stand Alone Equipment B: Stand Alone Service C: Freemium Service with or without equipment D: Equipment subsidized by B2C paid service E: E  quipment subsidized by a B2C free service (paid by a third B2B) Multimedia Security & health Fluids & White products         Ø Ø Ø   new  Thoughts. Voltalis) Figure 6 –5 major business models. Blu-Ray.g.g. whether including the equipment or service or not. SIM only phone package. Smart Home: Hope or Hype ? 12 . power supply) C Freemium service: C1 Without equipment subsidy (e. The main trend is the development of a model of service-subsidized equipment A Stand-alone equipment (e. Powermeter by Google) D Equipment subsidized by a B2C paid service (e.g. ISP Package) E Equipment subsidized by a third B2B / B2C free service (e.g.

or even standardization of APIs so that each partner can integrate their own solutions • Upstream analysis of all players’ needs to prevent the development of technologies in silo The large number of players and business models to assemble. Also. the final integrator will depend highly on the target and the positions of the players in their respective markets: • Enterprise market: Building constructor / Equipment manufacturer / Facility management • Services and Utilities market: Operators of environmental services and energy services • Residential market: Telecom operator Although only one player would be able. it is crucial that each player of the Smart Home value chain – vendor. Emmanuel Joumard. The experience acquired in the Enterprise market can then be harnessed in order to address the residential market.Players willing to structure the ecosystem around partnerships and a common business model should rely on key technical levers: • Provision of open enablers. where volumes and stakes are higher and where the initial investment is easy to monetize. operators could prioritise the Enterprise market. by organizing their coordination and providing their expertise in technological interoperability issues. adapts to the specific economic models of the partners. to integrate all Smart Home silos. financially and technically. To accelerate the establishment of these partnerships. they would neither be in the right position nor have an interest in offering the full range of Smart Home services to the consumer market. Smart Home: Hope or Hype ? 13 . Home Automation & Controls Business Group Director Somfy | France Thoughts. as well as the technological complexity of the required services. their business expertise and their mastery of the customer relationship. Thus. To achieve real success in developing this market on a large scale. operator or integrator – learns to work with the others. induce that the market will take time to structure itself. software vendors can become key players in the communication between stakeholders.

manage multiple services and identify opportunities related to new entrants/ pure players. connectivity and service at the same time. Smart Home: Hope or Hype ? 14 . customer relationship operations. with high customer acquisition costs. the telecom operator has the ability to disseminate standards using the compatibility of the Box at the regular renewal of the communicating equipment. 1. in a fastmoving world • Business model: expertise in the subsidy business model. for distribution. design and sourcing of equipment/ content • Mastery of norms/ standards: in France. The telecom operator is well-equipped to address main dimensions of the value proposition • Construction of offers: powerful marketing departments and expertise in launching offers • Point of entry for home connectivity: the telecom operator covers all technological elements and is an essential gateway of services through the Box • Data ownership: experience developed in sharing customer data with retailers and providers of contents • Exclusive partnerships: experience gained in building partnerships and managing partners. because of the Box penetration.V. Telecom operators can build on key assets to play a central role in structuring the ecosystem in a B2C perspective In ten years. and depreciation over its lifetime • Mastery of the mobile universe (for some operators): ability to provide control and remote management services for installation via mobile Telecom operators can build upon their Box services and their business model to provide Smart Home offers Figure 8 –a native and increasingly advanced presence of isp box in the housings Viewing functions on home screens Zigbee or Wifi synchronization between the meter and the ISP Box IP Network Management of existing electrical network Smart Home Equipment Source(s): Operator’s data Thoughts. during the deployment of a new generation of box • Positioning on the value chain: ability to implement different types of partnerships. whilst providing equipment. telecom operators have managed to establish themselves in the home as a central link to the world of entertainment. Mastery of the triptych “device/ software/ service” is one of the telecom operator’s key assets and can be used to structure Smart Home players around a packaged offer targeting residential customers.

relay point. mail. in exchange for a 24-month commitment. boutiques. call centers.5 months standard client) (+ 5 months standard client) Source: Greenwich Institute (November 2012) 2. distribution of information on technical products • Reception and training of the customer to use and manage sophisticated equipment • Network agency and extended distribution channel • Ability to manage multiple configurations based on a client’s technical eligibility • Remote management of the client • Customer support during his life time at home and remotely (call centers. telesales. Broadband Very high broadband Client acquisition cost 250 € 500 € Smart house solution extra charge + + 130 € 130 € MCV broadband client 20 €/month 25 €/month ROI ISP client smarthome 19 months 25 months (+ 6. a fixed telecom operator has the ability to provide a standard Smart Home offer (including some home automation) without surcharging these new customers. moving) and customer risk management • Customer satisfaction and complaint management Thoughts. intervention force) • Mastery of channels and customer contact data (email. Smart Home: Hope or Hype ? 15 .Figure 9 –a broadband customer business model that is able to integrate a smart home solution Given the margin per Broadband customer.. The telecom operator has the key functional elements required to manage Smart Home customers at lower costs Telecom operaters have developed an Information System and technical elements required for the management of home equipment installation and then the implementation of a remote source delivery • Training of sales force. SMS. IVR.) • Billing and management of contentious clients • Exchange logistics and After-Sales Service management • Contact with the customer at critical moments (purchase/ renewal of devices..

intervention forces management. troubleshooting/ home intervention. insurance premiums/ investment management. failure management. Deputy CEO . the telecom operator lacks legitimacy when it comes to the content of Smart Home services The telecom operator has neither the expertise nor the legitimacy from a client perspective to provide an integrated Smart Home offer • Insurance / security / health: customer risk and disaster management. equipment reliability. pricing • Technical support: home network set up. sizing…). A company like Lyonnaise des Eaux provides a Smart Water offer. which represents the starting point for all these new services. network of partnerships with the experts.. (production. Smart Home: Hope or Hype ? 16 . Pierre Andrade. configuration of miscellaneous equipment. optimisation of customer consumption. distribution/ routing. The challenge for Water companies is to ally operational expertise in the water sector and the development of new ICT in order to develop effective and innovative services to increase customer satisfaction and to provide relevant tools for consumption management and natural resources and Environment protection.. security of customer data… • Energy / Utilities: provision of service delivery. To do so. However.. The development of new information and communication technologies will significantly change our businesses and revolutionize the way we operate and manage our services. we capitalize on an integrator role on the entire Water value chain to develop specific offers with different levels of service adapted to each segment and customers’ expectations. after-sales service.3.Lyonnaise des Eaux Thoughts. legal responsibilities.

Prioritising equipment • Consideration of the customer added value provided by the features with respect to the cost of equipment needed to supply these features • Prioritisation of the value of the Stand-alone equipment. “technophiles” • Finally. This strategy should be guided though the prioritization of customer value propositions around 4 pillars outhired previously. initial prioritisation of Enterprise clients. total value perceived by the customer. 1.. the equipment provided with the functionality and the devices providing this functionality if purchased separately • Consideration of the equipment lifetime in the economic analysis 3. Prioritising services Prioritisation of services to be included in the service proposal made ​​to the customer: • Consumption monitoring and management/ optimisation • Acessibility of the interface and display devices • Customer journey and support • Service settings (alert thresholds. more palatable to energy consumption optimisation services.. by selecting high-energy consumers • Second..) 4. Prioritising fluids • Prioritisation of fluids (utilities) to be added into the package offered to the customer • Consideration of expected developments in the value perceived by the customer around the fluid: volatility of unit price. Greenwich Consulting : our methodology to implement smart home The partnership strategy necessary for Smart Home implementation can only be carried out through successive waves given the number of players needing co-ordination. Prioritising customer segments Customer type and prioritisation based on their ability to pay. control functionalities. covering existing homes encompassed by the energy retrofits regulations by integration of sensors and optimising consumption in energy scoring 2.) Thoughts. For example: • First. target supply (house/ apartment .VI. Smart Home: Hope or Hype ? 17 . regulatory impacts and potential market evolutions. modalities of alert... targeting niche markets: very large consumers.

competition / new entrants • Identification of business and industrial partners • Identification of best practices • Design of the value proposition • Qualitative and quantitative studies • Assessment of possible business models • Association of customer profiles with potential services 1. 2. Thoughts. • Define a first segmentation • Target customers to study • Conduct a qualitative and quantitative study • Consolidate and analyze results • Build the pairs segment/ appetite for some services Step two is to nourish the first phase in order to work on a limited list of services to be tested. Carry out an assessment of potential innovative services Categorize the range of possible services within the Smart Home system: • Perform an international benchmark and identify successful models/ services • Identify and assess initiatives already undertaken through interviews • Evaluate and categorize the identified services This phase should be conducted in parallel with customer segmentation to iterate the process of segmentation and to nourish qualitative and quantitative studies.Based on our experience in working with complex ecosystems which involves multiplicity of stakeholders like NFC. Only a thorough understanding of customer expectations will allow building appropriate offers. Build an aspirational segmentation Identify the pair segment/ demand for some services by adopting a structured and quantitative approach. we recommend a three stage approach as shown in figure 10 Figure 10 –Greenwich Consulting approach to conduct Smart Home Reflection and implement a strategy 1 2 3 Build an aspirational segmentation Investigate innovative services Map the ecosystem and assess the models • Identification of current and future customers’ needs • Portfolio of initiatives • Features of current solutions • Previous experiences on similar issues such as NFC • First customer segmentation on the basis of macro service criteria to be tested • Positioning vs. Smart Home: Hope or Hype ? 18 .

To propose a value-added offer.Greenwich Consulting Thoughts. value-sharing. players from different horizons position themselves on this market but offer solutions that only partially meet customer expectations. fluids and the most profitable solutions Today. Adopting a customer-focused approach 2. Building legitimacy on the topic by identifying the best partnership models (investment allocation. ownership of the customer base.3. Partner .…) 3. by investigating their deeper needs and better understanding their willingness to pay for such services with regard to the expected benefits Nicolas Clinckx. companies need to implement a more segmented approach based on customer types. Map the ecosystem and assess models Define scenarios then conduct experiments: • Identify the ecosystem of each pair segment appetite • Position each pain in the ecosystem • Identify the best strategy of integration in the ecosystem • Define the business models adapted to address each of these identified cases • Build scenarios and prioritise them The three key success factors for building an approach to frame a Smart Home offer are: 1. Smart Home: Hope or Hype ? 19 . Using a wave approach on the market place by prioritising equipment.

All our latest publications are available at www.greenwich-consulting. media and utilities markets. Media and Utilities and Wight Consulting for the Financial Services.greenwich-consulting. please visit www. Greenwich Consulting is the leading sector based management consulting firm globally within our niche. Our aim is to be Agent of change: we focus on the most impacting drivers of industry change and seek to create sustainable competitive advantage. requiring a specific and comprehensive approach. Copyright 2013 Greenwich Consulting Group Thoughts.com ABOUT GREENWICH CONSULTING Greenwich Consulting Group is a management consulting firm structured into sector-based companies: Greenwich Consulting for the Telecommunication. Greenwich Consulting Group is serving clients across more than 100 markets in all continents. Smart Home: Hope or Hype ? 20 .thoughts. The critical challenges raised by our clients are continuously evolving. Greenwich Consulting thoughts address structural issues that are reshaping the telecommunications. with a 35% compound annual growth rate (CAGR) in revenue over the last 10 years.com All rights reserved. With about 200 professionals. For more information. Greenwich Consulting Group is a unique success story in Europe.